The Great Wall of Texas: How the U.S. Is Repeating One of History's Great Blunders

By Glenn Hubbard and Tim Kane

Reuters

Before their empire fell, the Romans built walls.

They began by erecting barriers along the border following the death of the Emperor Trajan in 117 A.D., notably Hadrian's Wall, which belted Britain. Later emperors erected internal walls, even around the great city itself, to ward off barbarians. After 300 A.D., the Emperor Diocletian effectively converted the entire Roman populace into feudal serfs, walling them off from internal movement in a vain effort to stabilize the chaotic economy.

Despite the cautionary tale of Rome, building walls, both literal and figurative, has remained a habit of great powers in decline -- the fateful course taken not only by Ming China, but also Soviet Russia, and even Great Britain.

Sadly, many Americans are all too eager to repeat history.

Witness the immigration bill slowly making its way through Congress, and the feverish reactions it has inspired. In exchange for granting undocumented workers a path to citizenship, Republicans have demanded a so-called "border surge" that would double the number of patrol agents in the Southwest and build an extra 700 miles of fencing. Due to bipartisan prejudice against so-called "low-skill" migrants, the legislation is also loaded with dangerous new government controls over the labor market. The Senate bill, for example, requires employers to post new jobs on a Labor Department website, certify that no citizen is displaced, and surrender wage-setting to bureaucrats. Nevertheless, the conventional wisdom is that the bill will open a floodgate of foreigners. The Heritage Foundation issued an outlandish warning about the supposed multi-trillion-dollar fiscal burden of new immigrants, practically suggesting that the Statue of Liberty be melted down for the border fence.

Isolationism, unfortunately, is not limited to one policy or one party. Liberals have been skeptical of free trade for decades now. Less than 10 percent of House Democrats voted for the Central American free trade agreement in 2004. And Democratic politicians, including President Obama during his re-election campaign, routinely hype the danger of multinational firms outsourcing jobs.

Before the Fall, a WallThe psychological impulse to protect a nation's wealth and culture from foreign contamination is an example of what behavioral economists call "loss aversion" - the idea that people are more concerned about what they might forfeit than gain from change. History tells us that with great power comes great loss aversion.

Take the fate of Ming China, the world's most fabulously wealthy civilization in the 15th century. The empire cut itself off from foreign trade after the 1430s, an action urged by Mandarin bureaucrats in order to clip the power of the merchant class, their rivals at court. Court intrigue is also revealed by the extension of China's Great Wall, and the abrupt termination of the voyages of Admiral Zheng He, both reflecting the Confucian attitude that foreign barbarians offered nothing of value. The following centuries saw China transform into a weak and isolated time capsule.

Or consider the Berlin wall, the manifestation of the "Iron Curtain" that hid the stagnancy of Soviet power from 1961 to 1989. Unlike Roman or Ming walls, the communist walls blocked emigration rather than immigration, which is an even more destructive strain of inwardness. At least 246 East Germans were killed trying to escape to West Berlin, but millions more were imprisoned in a failing communist economic model. In its defense, GDP per capita in the Soviet Union rose from $4000 to $7000 per person during the final decades of the Cold War, but that compared poorly to British incomes, for example, that rose from $8900 to $16,400.

Britain itself is a particularly interesting frontrunner to the U.S., but not because of its reputation as the birthplace of free market economics. During the peak years of empire, Britain's Parliament neglected to extend citizenship to its colonial subjects not once, but twice. The first time it fumbled a continent full of human capital was in North America in the 1770s. The second time was in the 1880s, when a fear of declinism stymied progress.

Prime Minister William Pitt (the elder), who led Britain during the 18th century, recorded his own expansive dream of a Greater Britain in his personal papers. Pitt's "scheme for better uniting" proposed that there be four members of Parliament to represent Virginia, four for Pennsylvania, four for Massachusetts, three for Jamaica, three for New York, two for Canada, and so on. Adam Smith's The Wealth of Nations made the same appeal. And yet it never came to pass. In 1707, the English Parliament added Scotland's representatives to its chamber. Northern Ireland was given direct representation in 1800. Conspicuously absent was an offer to the Americas during the decades in between, or the Indians later.

Later, at the dawn of the 20th century, the British Empire was fading relative to other European nations. British economic power was roughly double that of France and triple that of Germany in 1820, a lead that eroded over the following century. Leaders in Parliament were puzzled by the relative decline, and began to question their historical "laissez faire" policies. Rather than reform its colonial structures, as Cambridge professor John Seeley called for, prime ministers debated which trade barriers to erect and how high. Decline followed.

Open the GatesThe real dilemma for American growth is not ignorance about good economics, but the quagmire of bad politics. Simple-minded protectionism in terms of trade or migration is being exploited by populists in both major parties. What our leaders need to understand is that the only existential threat facing America is not embodied by barbarians at the gates, but by American isolationism. To continue the miraculous American growth story, we need to continue the traditions of constant innovation, diversity, and openness to the world.